BP Profit Rises, but It Warns of Risks in Russia

LONDON — BP showed clear signs in reporting earnings on Tuesday that its once-lucrative business in the United States was recovering from the Gulf of Mexico oil spill of 2010. But the oil company also indicated that its large investment in Russia was growing riskier as economic sanctions against Russia escalated.

Until Tuesday, BP, based in London, had mostly shrugged off the implications of the confrontation in Ukraine, but the company’s tone has changed.

“I think that sometimes events occur that are unexpected and unintended that can change the course of history,” BP’s chief executive, Robert W. Dudley, said Tuesday. “I think that is what we have seen happen now with this event,” he said, referring to the downing of a Malaysian airliner over eastern Ukraine, which the United States has linked to Russia.

Mr. Dudley said that he expected the West to impose tighter sanctions against Russia, which the United States and the European Union did later on Tuesday. BP owns nearly 20 percent of Rosneft, the Russian state-controlled oil company.

Mr. Dudley emphasized that BP reduced its investment in Russia substantially last year when it sold its share in the Russian affiliate TNK-BP to Rosneft for $12 billion in cash as well as Rosneft shares.

But he said he still thought he was right not to completely sell out of the country because Russia was the world’s largest oil and gas producer and the world would need the country’s energy.

“We have worked in countries through ups and downs,” he said. “To draw a conclusion at a point in time about being there just wouldn’t be our nature.”

BP’s predicament in Russia was the main negative in what was otherwise a positive quarterly earnings report. The company said that profit rose 65 percent to $3.4 billion in the second quarter, with the United States emerging as a bright spot.

BP shares were down about 2.5 percent in trading in London.

BP’s production in the United States, which had been depressed by the combination of its inability to drill after the Gulf of Mexico oil spill as well as by sales of oil fields, rose by almost a third to 429,000 barrels a day, compared with the second quarter of 2013.

“Such an increase in high-margin barrels from the Gulf of Mexico is reassuringly in line with management’s promise,” analysts at Bernstein Research in London wrote in a note to clients on Tuesday.

Profit from United States production more than doubled to $1.4 billion. BP added a modest $260 million to provisions for litigation related to the Gulf of Mexico spill, bringing the total of such provisions to $43 billion.

Despite the international tensions, BP’s Russia business also continued to do well so far. The company’s results were bolstered by a $1 billion contribution from Rosneft.

BP said in its earnings statement, however, that a worsening of its relationship with Rosneft or the effect of further sanctions might “adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation.”

The company added that sanctions so far had had “no material adverse impact on BP” or Rosneft, but that it would continue to monitor the situation.

Despite the current sanctions on Russian companies and individuals — including Igor Sechin, the chief executive of Rosneft — BP highlighted that it had signed a preliminary agreement to look into developing shale oil from the Domanik formation in the Volga-Urals region of Russia in a joint venture with Rosneft.

There were signs that Mr. Dudley’s efforts to sell off older oil and gas fields and invest in more productive units were beginning to pay off. The company said that it had reached agreements to sell $3.4 billion in assets as part of a goal to reach $10 billion in such sales by the end of 2015.

BP said it would pay a dividend of 9.75 cents a share for the quarter, 8.3 percent higher than a year earlier.